The U.S. commercial remote sensing industry should receive a boost from a new Bush administration policy that calls for the U.S. government to use private sector satellite imagery whenever practical.

The policy’s aim is to give all remote sensing companies a chance to bid for the opportunity to meet the imagery needs of the U.S. government, said Gil Klinger, the National Security Agency’s director of space policy.

The new policy was welcomed by the U.S. remote sensing industry, which has been plagued by financial problems. One U.S. remote sensing company, Dulles, Va.-based Orbital Imaging (Orbimage), is operating under Chapter 11 bankruptcy protection. A second company, Denver, Colo. based Space Imaging, recently laid off workers as part of a major cost- cutting program. A third U.S.-based company, Digital Globe, of Longmont, Colo., is struggling to develop a business with just one in-orbit satellite.

The new policy covers licensing and operation of U.S. commercial remote sensing systems; U.S. government use of commercial remote sensing capabilities; foreign access to U.S. commercial remote sensing services; and government-to-government intelligence, defense, and foreign policy relationships involving U.S. commercial remote sensing capabilities. The newly authorized policy will supercede a nine-year-old U.S. government policy on remote sensing known as Presidential Decision Directive (PDD 23).

The fundamental goal of the new policy is to advance and to protect U.S. national security and foreign policy interests by maintaining U.S. leadership in remote sensing activities and by enhancing the domestic remote sensing industry, Klinger said. The directive will allow foreign remote sensing companies to provide imagery to the U.S. government, if those arrangements meet U.S. national security and foreign policy objectives.

The policy, which had been under interagency review for a year, requires that federal agencies complete a series of specific actions within 120 days.

Regarding the export of commercial imagery technology by U.S. companies, the administration will review those on a case-by-case basis. However, exports of sensitive or advanced information systems, technologies and components will be approved only rarely, according to an administration fact sheet.

The new policy follows up on a memorandum issued by Central Intelligence Agency Director George Tenet that directed the National Imagery and Mapping Agency (NIMA) to use commercial imagery for its military mapping missions. The Tenet memo and the new White House policy shows that the U.S. government is interested in helping the industry succeed and stay at the cutting-edge of remote sensing technology advances.

Robert Delal, CEO of Space Imaging, said, “This is a forward-looking policy that confirms the government’s long-term commitment to the high-resolution commercial satellite industry. Nine years ago, the White House committed to enhance U.S. industrial competitiveness in the remote-sensing field. Today, the president stated the government’s commitment that will ensure U.S. companies continue to lead this important emerging technology.”

Space Imaging is the largest of the U.S.-based remote sensing companies, operating multiple lines of business. Its 2003 revenues are projected to exceed $200 million. In addition, the company has racked up double-digit growth rates during the past five years and is cash flow positive, said Mark Brender, its vice president of corporate communications.

Space Imaging is eyeing expansion. It disclosed plans last week to develop a next-generation commercial remote-sensing satellite with Raytheon [NYSE: RTN] and Lockheed Martin [NYSE: LMT]. The partnership also would compete for NIMA’s NextView contract that will assure the agency has sufficient capacity on commercial industry’s next-generation imaging system.

To position itself for the contract, Space Imaging applied last November for a license to build and to launch a commercial remote sensing satellite that would have a ground resolution of 0.25 meters. While final decisions have not been made, the proposed 0.25-meter resolution could be used with Space Imaging’s next-generation satellite if the U.S. Commerce Department grants the licenses. A decision is expected by the end of the year.

The 0.25-meter resolution would be “far superior” to any commercial imaging system in the world today, said Brender. However, he cautioned that the government could put conditions or restrictions on the license.

Orbimage is another potential beneficiary of the new U.S. government policy to buy needed imagery data from the private sector whenever practical.

The policy change offers several positive effects, including a reduction of “uncertainty” in the capital markets about the financial viability of remote sensing companies, said Timothy Puckorius, senior vice president of worldwide marketing and sales at Orbimage. The question about how committed the U.S. government will be to using commercial imagery now has been answered, he added.

Another byproduct of the new policy is that it will help Orbimage “raise money,” Puckorius said. Investors will have more confidence knowing that the U.S. government is committed to buying commercial imagery, rather than building and launching new satellites, he explained.

The new policy demonstrates the government’s faith in the ability of U.S. remote sensing companies to become global leaders in providing such commercial products and services, Puckorius said.

Orbimage’s OrbView-3 imaging satellite with a 1-meter resolution has been shipped toVandenberg Air Force Base (VAFB), Calif., where the spacecraft is scheduled for launch June 15 aboard Orbital Sciences’ [NYSE: ORB] Pegasus rocket. The satellite is to be placed in low-Earth orbit.

Lisa Andrews, manager of sales programs at Orbimage, said the OrbView-3 launch was delayed from its earlier date of June 1 to allow time for satellite builder Orbital Sciences to correct a battery problem onboard the spacecraft that was discovered in recent days.

The upcoming launch of the OrbView-3 is a “long awaited milestone” and a critical element to Orbimage’s reorganization plan, said Matthew O’Connell, Orbimage’s CEO. Following the successful launch of OrbView-3, Orbimage would emerge from Chapter 11 bankruptcy protection with the industry’s best balance sheet and over $300 million in contract backlog, he added.

OrbView-3’s high-resolution camera will acquire 1-meter resolution panchromatic (black and white) and four-meter resolution multispectral (color) imagery. The company’s in- orbit satellites would be able to provide an image of virtually any location in the world within three days, its officials said.

Herbert Satterlee, CEO and chairman of DigitalGlobe, joined the chorus of remote sensing industry leaders who rejoiced about the new federal policy.

“By issuing this directive, the Bush administration pushes the technology envelope by encouraging all agencies to look to private remote sensing companies for their imaging requirements,” Satterlee said. The directive should “further solidify” the commercial satellite-imaging industry, he added.

DigitalGlobe’s QuickBird satellite, launched Oct. 18, 2001, is the most recent and the most powerful entry into the Earth information marketplace, company officials said. QuickBird offers the highest resolution satellite imagery available in the commercial market with the broadest swath.

The new policy also addresses a number of recommendations outlined by the U.S. Chamber of Commerce’s Space Enterprise Council. Those recommendations included expanding government-industry relationships, streamlining licensing and modifying export controls.

“Maintaining the competitive advantage in the global marketplace is critical to our economic and national security,” said Dawn Sienicki, executive director of the Space Enterprise Council. Now, the focus must turn to implementation of the policy, she added.

Currently, the U.S. commercial industry has two high-resolution remote sensing satellites that provide images sharp enough to count cars parked on a street. The uses for this technology include homeland security, federal, state and local government mapping, forestry and environmental monitoring, insurance and risk management, and disaster assessment, among others, she added.

Three federal agencies – the National Oceanic and Atmospheric Administration, the National Aeronautics and Space Administration and the U.S. Geological Survey – have been tasked with developing a process to increase use of commercial imagery by civil agencies. Remote sensing companies would be aided by adoption of an effective and streamlined method for civilian agencies to buy commercial imagery, said an industry official, who did not want to be identified. That approach would best serve the U.S. taxpayer, along with giving agencies the ability to purchase value-added services directly from remote sensing companies, the official added.

During a panel discussion about financing remote sensing at last week’s conference in Washington, D.C., called “Commercial Remote Sensing: Improving the International Business Environment.”

Andrea Maleter, technical director of the Bethesda, Md.-based Futron Corp., said that almost all satellite businesses now are promoting government sales opportunities. She pointed out that the unique capabilities of remote sensing satellites give this sector a greater potential to build a long-term partnership with civil as well as military government users. The new remote sensing policy should aid these efforts, she added.

DoD Dependency?

The U.S. Department of Defense’s (DoD) demand for commercial satellite imagery is on the rise. For example, Space Imaging and DigitalGlobe received DoD contracts in January to provide satellite imagery over the next five years. The DoD has a budget of up to $500 million to purchase commercial imagery.

Commercial imagery commonly aids with combat, training and military support, said James “Snake” Clark, director of the U.S. Air Force Combat Support Office. Indeed, imagery from commercial remote sensing satellites sometimes offers the best and most current information, he added.

Despite the industry’s emphasis on launching new, higher resolution remote sensing satellites, access to imagery from an array of resolutions is ideal for providing a full picture of an area, Clark said. “One size does not fit all,” he added.

The commercial remote sensing industry must ensure that its products and services are cost-effective, Clark said. Companies should set prices to recover the costs for building and launching a remote sensing satellite over the life of the spacecraft, not just during the first year in orbit, he explained.

It would be better for a company to collect $10 million a year for the next 10 years, than to try charging $100 million for one year only to find no customers willing to pay that price, Clark said.

Remote sensing companies should make the imagery they provide as user friendly as possible. “Simplicity is the key,” Clark said. The larger the community that can use the product, the greater the potential revenue stream, he explained.

The importance of remote sensing imagery is reflected by its use in virtually every U.S. government military and humanitarian mission in the past 13 years, Clark said.

–Paul Dykewicz

(Mark Brender, Space Imaging, 703/558-0309; Sarah Johnson, DigitalGlobe, 303/786-7000, ext. 221; Tim Puckorius, Matthew O’Connell, Lisa Andrews, Orbimage, 703/480-7500; Dawn Sienicki, Space Enterprise Council, 202/463-5682; James “Snake” Clark, U.S. Air Force, 703/693-3377; Andrea Maleter, Futron Corp., 301/347-3450)

U.S. Policy Goals:

• Rely on U.S. commercial remote sensing space capabilities for filling imagery and geospatial needs for military, intelligence, foreign policy, homeland security and civil users;
• Focus U.S. government remote sensing systems on meeting needs that cannot be effectively, affordably and reliably fulfilled by commercial providers due to economic, mission, national security or foreign policy needs;
• Develop a long-term sustainable relationship between the U.S. government and the commercial remote sensing industry;
• Provide a responsive regulatory environment for licensing the operations and exports of commercial remote sensing systems; and
• Allow U.S. industry to compete for contracts to serve foreign governments and other non-U.S. users, while still enforcing U.S. national security and foreign policy objectives.

Source: National Security Council